IRA Bene in Community Property State
I recently saw a Q&A regarding designating a non-spouse beneficiary in a community property state. According to the piece, an IRA owner residing in a community or marital property state that wishes to name a person other than their spouse as beneficiary of their IRA must receive spousal consent to do so. Do you share that same opinion?
I did not think spousal consent was necessary for an IRA.
Permalink Submitted by Alan Spross on Thu, 2008-08-28 01:45
It is up to the IRA custodian, but most of them probably require the spouse’s signature to avoid becoming embroiled in litigation. The spouse has an implied 50% community interest in the IRA regardless of the single person IRA registration. Each IRA may be fully or partially funded during the marriage, and if a divorce settlement cannot be worked out, a rather difficult accounting of all assets must be completed to determine the total of community vrs individual assets. The IRA custodian simply wants to be able to avoid involvement and be able to issue distributions to the beneficiary without legal problems.
A similar problem can occur when the IRA owner passes, and another party disputes the amount of the IRA that was in fact community property vrs separate.